CME Group mistakenly revealed swap trades to market participants

CME Group Inc., the world’s largest futures exchange, mistakenly disclosed energy and agricultural swap trade details to market participants, the company said.

The leak was caused by a malfunction in the Chicago-based exchange operator’s swap data repository that allowed “a small number of market participants, who were entitled to make inquiries of the system, to view commodity swap trades of other market participants,” CME Group said in an e-mailed statement today. New York-based hedge fund D.E. Shaw & Co. was affected by the leak, Dow Jones reported earlier today, citing unnamed people familiar with the matter.

“We regret this incident occurred as maintaining the confidentiality of market participant data at all times is vital to the operation of our markets and systems,” CME Group said in the statement. Information on about 500 trades out of a total of nearly 1 million transactions was disclosed on April 1, CME Group said.

The Dodd-Frank Act, the 2010 regulatory overhaul, gave the Commodity Futures Trading Commission and Securities and Exchange Commission authority to write rules requiring swaps to be processed by clearinghouses and to have that trade data reported to the agencies and the public. The law, enacted in response to the 2008 credit crisis, set up so-called swap data repositories as record-keepers for information about buyers and sellers, volume and prices.

Leak Alerted

CME customers alerted the company to the leak on April 2 and the issue was fixed by the next morning, the company said. Trade details are meant to be kept private as they can be acted on by competing market participants to gain advantage.

In March, CME Group won regulatory approval from the CFTC to have information about swaps routed to its own database over the objections of the Depository Trust & Clearing Corp. and banks including JPMorgan Chase & Co.

The DTCC has said the CME plan fails to comply with more than a year of CFTC rulemaking and would lead to worse oversight of the market because data will be fragmented.